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March 2015

How to protect the future - support your local companies, incentivize modernization!

NEPCON China 2015 will again focus on electronics manufacturing automation focusing on automation system integration, a step beyond mere hardware equipment. Starting this year, Guangdong will run a three-year incentive plan to encourage companies in the Pearl River Delta (PRD) to replace manual labor with robotics. It is targeting 600 companies with this program. A company that procures robotics to replace manual labor will receive a 10-20% rebate from the government!

In February, the Dongguan municipal government published the Dongguan 2025 Manufacturing Strategy that included 43 strategic measures. One of these measures called for accelerated robotics adoption. Last year the Dongguan municipal government initiated a plan to encourage robotics adoption by providing an annual rebate of $32.2 million to support companies. Recently, the Hong Kong Productivity Council initiated a cooperation project with Kuka Shanghai to adopt automation solutions in Hong Kong and the PRD.

Electropac has become a new division of Mass Design, Inc. with the recent purchase of this printed circuit board manufacturer founded in 1976 in Manchester, New Hampshire. The planned takeover by former employees to form Valhalla Circuits announced a few months ago apparently was not successful.

Lower growth rates, the pressure of annual double digit mandated wage increases, and the spectre of potential increases in the 15% tax rate afforded the electronics industry to the country's norm of 25% for corporations is casting a shadow on future investment in China for foreign owned EMS companies. Pressure is already being applied by the federal government onto local and regional operations that may have over-committed in  past incentives to attract foreign industry. Many are trying to second guess the next "desirable" location if this occurs - even as domestic Chinese electronic manufacturing companies are ramping up their systems and their automation development activities.

I believe that China's electronics industry future success will depend greatly upon automation, the use of new technology in manufacturing, improved quality, a combination of licensing of off-shore products and technology, a new-found home-grown (including Taiwanese) "innovation", and its domestic market.

I remember "The Japan That Can Say No: Why Japan Will Be First Among Equals" the 1989 essay originally co-authored by Shintaro Ishihara, the Minister of Transport, who later became governor of Tokyo, and Sony co-founder and chairman Akio Morita. It was produced during the climate of Japan's economic rise. I wonder if there is any relevance to today's situation. I recall reading two versions: The first was a translation provided by a friend in the Pentagon. The second, several months later, was a slightly different less threatening version that was reportedly published in English in Japan for "public consumption" by Americans.

PR NEWSWIRE states that HDI was still a main engine of growth in rigid PCB field in 2014, and is expected to maintain the momentum in 2015. As for Anylayer HDI  technology increases in Greater China combined with Panasonic's withdrawal from the Anylayer HDI field, various PCB companies will expand Anylayer HDI capacity in 2015. In 2014, the company that registered the largest growth in revenue from the HDI PCB business was Taiwan's Compeq. Its customers include Apple and Xiaomi. It increased 28.3% to $690 million, one step away from industry leader Unimicron.

ResearchInChina published its data’s top 20 PCB companies in the world for 2014. Industry sales totaled $59.6 billion for the year.

Global Top20 Rigid PCB companies in 2014 (revenue in USD million)

       1. TTM..............................(1,398)
       2. Tripod..........................(1,388)
       3. Compeq.......................(1,158)
       4. Viasystems..................(1,028)
       5. Hannstar Board..............(958)
       6. Unimicron.......................(918)
       7. MEIKO............................(860)
       8. ZDT.................................(850)
       9. AT&S...............................(838)

     10. Kingboard PCB...............(830)
     11. CMK................................(750)
     12. Chin Poon Industry........(738)
     13. SEMCO............................(680)

     14. WUS Group.....................(650)
     15. IBIDEN...........................(630)
     16. Multek............................(608)
           Gold Circuit Electronics..(608)
     17. ISU PETASYS..................(508)
     18. Unitech PCB...................(478)
     19. Shennan Circuits............(451)

     20. Hitachi Chemical............(420)

Foxconn's PCB unit Zhen Ding Technology saw its net EPS climb to a record high of $0.29 in 2014.

Reports for the CPCA show collocated with SEMI and other shows in Shanghai are mixed. Traffic was heavy, except for the last day which was devoid of prospects. The first two days had "lots of people from other shows" but contained few managers from printed circuit companies. There was an increase in products designed for automation in keeping with China's trend to move in this direction. There were also a number of vertical wet processing lines. Our contacts stated that the exhibit was huge and full of copies of specialty chemicals, materials and process equipment. They stated that they saw several "improved" Chinese equipment sets, but did not note any new major introductions.

China is unusual in that it is so large with more than one manufacturing center with different cultures, that it has more than one trade association targeting the interconnect industry. It also has two major NEPCON shows, one in Shanghai and one in South China (Shenzhen). This makes it difficult for companies to reach "ALL" of its targeted markets with a reasonable budget. It also makes it easier for local companies to reverse engineer products and jump into the fray.

We'll attend NEPCON in Shanghai next month which will have over 500 exhibitors covering nearly 270,000 square feet of floor space. The event will debut The Electronics Manufacturing Automation (EMA) Pavilion.  Automation system integrators such as Intelligent Group Zhuhai, Robo-Technik, Nitto Denko, Apeexpress, JOT Automation, and IPTE will demonstrate their wares as electronic manufacturers attempt to stave off further flight from China by such firms as UniqloClarion, and Samsung  to other countries. due to rising costs and inefficiencies of high manual labor content.

Japan's Ministry of Economy, Trade and Industry (METI) released the final 2014 performance data for the electronics industry. Total domestic production for the electronics industry in 2014 was about $100 billion up 2.6% from 2013. The 3 major segments defined by the METI are consumer electronics, industrial electronics, and electronic components including ICs and LCD display panels.
The consumer electronics segment dropped 15.7% from last year. Sales of flat panel TVs declined 6.1% compared to the previous year which was one of the worst years for this segment. (Japanese manufacturers now have almost zero production). Sales of digital cameras went down 30% in 2014 – most likely due to the improved cameras in “smart phones”. Car navigation systems were more than 50% of consumer electronics sales even as it declined 5.9% from last year.
The industrial electronics segment had sales of $29.7 billion, down 3.1% from 2013.
The electronic components segment posted revenue at $61.8 billion, up 7.8%.
Printed circuit boards went down another 2.7% in 2014. 

One of the big questions is, "Will anyone save Sharp, once king of the flat panel display makers, and if so who?" Meanwhile, Sony which had posted losses in 5 of the past 6 years is seeing some success with its turnaround efforts. Strong sales of its image sensors and PlayStation video game consoles is helping to boost profits. Sony, in the midst of restructuring, has exited the PC business, its struggling smartphone, and TV divisions which are faced with strong competition from Korea, China, and Apple.

We continue to monitor and participate in the discussions on "re-shoring",  automation, and critical supply chains for domestic (U.S.) fabrication and assembly in the face of increasing global economic and stability difficulties. China has lowered its forecast 7% for the forthcoming year's growth rate. Major firms operating in the PRC (e.g., Hon Hai) continue to drive to automation. Some "off-shore" investors have moved to the interior or begun to explore other countries . Greece is resisting tightening its belt further to meet its Euro debt obligations. If it leaves the European community can another economically challenged country such as Italy be far behind?

Is there a domestic supply of all critically needed specialty chemicals, components, equipment needed to produce electronic devices for medical or military applications in the U.S.? Should there be? If not, are there trusted suppliers in secure locations to provide the aforementioned materials and machines, or boards and sub-assemblies? What is there to prevent factory shutdowns and supply disruptions if the domestic suppliers are foreign owned? (Note the closure of foreign-owned copper foil maker Oak-Mitsui TechnologiesHoosick Falls, New York plant in order to move operations to Malaysia in Southeast Asia - closer to its larger customer base).  For that matter, what is there to prevent a domestic company from relocating ALL of its production to a more viable (economic and/or market) site? After all, don't we engage in a free market system?

What does one do if the government decides that a product is critical and the maker has already moved all the manufacturing of said item to China, or Malaysia?

We should also note that there are currently sufficient domestic EMS houses to provide for production runs of medical or electronic devices. It is the supply chain of materials for bare board production, as well as the sources of components that are of concern.

Counterfeit components, materials and spare parts are entirely another matter and are already the focus of a number of major activities - both private and government. - Note our Comments & Discussion page for thoughts from "an undisclosed source".

See Bernie Kessler's opinion on our Comments & Discussion page. Send your comments and opinions on the above to:  gene@weiner-intl.com

Hong Kong added 10 names to the newest Forbes list of billionaires. It now has 55. Notable among this year’s newcomers to the Forbes  roll of billionaires is electronics magnate Tang Hsiang-chien, the father of Henry Tang, a former candidate for Hong Kong's chief executive in 2012, and Tom Tang, Honorary Founding Chairman of the HKPCA and Managing Director - Asia Pacific Region of TTM Technologies since April 2010. Prior to that, he was the Executive Chairman and Group Managing Director of Meadville Holdings (Meadville), which he joined in 1991. The Tangs are investors in U.S.-listed TTM Technologies.

February 2015

IPC APEX was the busiest in many years in terms of numbers of exhibitors and attendees.

The tribute to Dieter Bergman was an historic industry event in which it seemed that every member of a "packed house" had a memory of the IPC icon to share. David Bergman, MC'd the evening in which he read touching recollection of Dieter's career written by Raymond Pritchard, the founding Executive Director of the IPC. Lesley Bergman, Dieter's widow, promised a book based upon their daily diary. It will be a love story.

During the affair, the first Dieter Bergman IPC Fellowship Awards were bestowed upon eight select individuals who have exhibited long term leadership in promoting IPC and global standardization efforts. These award recipients bestowed the  first Dieter Bergman Memorial Scholarships as follows:

Bob Neves, Microtek (Changzhou) Laboratories (Pacific Union College, Engineering Dept., Pacific Union College in Angwin, California); Doug Sober, Shengyi Technology Co. Ltd. (Clarion University, Chemistry Dept.); Denny Fritz, SAIC (Rose Hulman Institute of Technology, Terre Haute, Indiana); Don Dupriest, Lockheed Martin Missile & Fire Control (Texas A&M University-Commerce Foundation in Commerce, Texas); Ray Prasad, Ray Prasad Consultancy Group (University of Washington, Nanofabrication Facility); Randy Reed, Viasystems Group, Inc. (South Dakota School of Mines and Technology); Bernie Kessler, Bernard Kessler & Associates, Ltd. (University of Southern California, John Marshall School of Business); Dave Hillman, Rockwell Collins (Iowa State University, Materials Science & Engineering (MSE) Dept.).

Above: John Mitchell [left] and David Bergman present the Dieter Bergman IPC Fellowship Award to Bernie Kessler [center]. Bernie was the most "senior" of the eight recipients and a contemporary of Dieter. My wife Marcy and I first met Bernie in February, 1963. We decided to extend our honeymoon to overlap several technical meetings and presentations that I was scheduled to make in Southern California the following week. Bernie was the first person in our industry that my new bride met (besides of my employer). He picked us up at LAX and on the way to our hotel in Orange County he asked Marcy if she had ever seen a factory that made copper clad laminates. She replied, "What is that?". Bernie immediately reversed direction and took us to tour the Mica Corporation in Culver City. When I reminded Bernie that we were on our honeymoon, he stated, "That can wait."

eSurface made its presence at the show well-known with its keynote and luncheon sponsorships, videos, and literature about "making the impossible possible".

VIP's at the eSurface booth left to right are: John Mitchell, IPC President, Adaline Woodard, District Representative, Office of Congressman Darrell Issa (R-Vista, CA), Janine Pairis, District Director, Office of Congressman Juan Vargas (D-Chula Vista, CA), Mike Corrigan, eSurface President , Rick Terrazas, District Chief of Staff, Office of Congressman Duncan Hunter (R-El Cajon, CA), Rowland Hanson, eSurface Board of Directors & GM Strategic Communications, Jim Ryan, eSurface Vice President of Business Development, Shea Benton, Field Representative, Office of Congressman Scott Peters (D-San Diego, CA), Alex Richardson, eSurface Vice President of Global Strategic Operations, John Hasselmann, IPC Vice President of Government Relations.

Select show attendees were invited to view the new breakthrough additive circuit process run at Murrietta Circuits in Anaheim, eSurface's "local" licensee. A European attendee that saw the system running in Anaheim said, "When a shop like Murrietta can run the process then I would consider this as a proof of the functionality of the system. I consider the eSurface process as an advanced imaging technology like Riston was in the late 60s."

A number of attendees reported that they saw little that was new. We had no problem "discovering" a number of important new items or major changes. For example, OMG introduced a zero stress electroless copper deposit which we consider important for flexible circuits, wearable electronics and other applications where stressed copper deposits are detrimental to fabrication or performance life. It does not contain EDTA, making waste treatment of rinse waters or spent solutions easier. It can be operated in vertical or horizontal mode. It can also be used for plating over filled vias where adhesion is critical. YINCAE Advanced Materials described its new solder joint encapsulant which reportedly quintuples solder joint strength. P.K. Metals showed the AKILA dross recycling unit (for metal reclaim) built by WKK* for use with P. KAY Metals' MS2.

*WKK builds equipment "to print" in its secure campus in China near Hong Kong for OEM companies around the world.

Chrys Shea stated that she observed a couple of "cool developments" in stencil printing that are noteworthy. She said that specifically on the PCB assembly side, innovative new technologies in the critical stencil printing process included:
• A new stainless steel stencil alloy from Datum that raises print performance and lowers price
• The rapid growth of stencil nanocoatings with Aculon announcing DEK and Alpha as worldwide distributors
• Incorporation of intelligent subsystems in Parmi’s solder paste inspection machines to help diagnose problems, and even fix some of them inside the machine.

Camtek unveiled the Gryphon SL and gave live demonstrations of the system's capabilities showing a full cycle of solder mask deposition and legend printing by advanced inkjet layering techniques that conquered uneven topographies while curing each layer.

Dr. Alan Rae, Executive Director ATRI / CCIC, stated, "Apex was well attended and the show floor was alive with people making deals. In terms of new technologies, the eSurface booth was particularly striking and had good traffic. ----- One of the ongoing challenges in the standards areas is that companies are finding it more difficult to send representatives to standards committees, and standards with fewer participants run the risk of being less universally effective standards."

Fabcon (OLEC) displayed two new imaging systems: the Microprint DI (below on the left) and the Accuprint SSi (on the right).

The Microprint DI is a DMV direct imager with a 32,000 dpi image matrix which means that it has a submicron raster single pass scan that provides smooth edges on circuit patterns. It is available in single head or four head versions. The Accuprint SSi is a contact printer that uses a solid stae UV LED light source with multiple heads that provides the equivalent energy of an 8KW light source for exposing UV curable solder masks as well as conventional primary imaging resists. It can process solder masks at 2 to 4 sides a minute. Fabcon announced at the show that it has become a working partner of eSurface to develop special equipment for 3D exposure with eSurface's process for making surfaces conductive.

IPC President Dr. John Mitchell presented Gary Ferrari, FTG Circuits (above left) and Nilesh Naik, Eagle Circuits with the industry's highest award, induction into the Raymond E. Pritchard Hall of Fame.

Cisco Systems' strong quarterly results are positive for companies in the networking giant's supply chain, such as Celestica, Flextronics International, and Amphenol according to RBC Capital Markets.

Taiwan-based supply chain companies are forecasting a better 2015 than 2014. Flexible circuit maker Flexium Interconnect expects that sales this year will outpace those of 2014. January sales of $55.2 million were up 60.6% January 2014.

Apple Watch, which will soon be widely available, has already made an impact on its production supply chain. Since Apple adopted SiP technology, PCB manufacturers who make substrates for Sip, such as Nanya PCB and Kinsushave shipped out over one million substrates in January. ASE, who has received OSAT (Out Sourced Assembly & Test) orders for SiP (System in a Package), has also benefited by the ramp-up of Apple Watch.

Unimicron, Kinsus, Tripod, Compeq, Apex, and Chin Poonare among the many PCB manufacturers that plan to increase production by expanding new plants or purchasing new equipment. The results of this increase shall be seen in the second half of this year. Compeq's growth this year is expected to be mainly from new smart phone HDI orders.

The price of copper-clad laminate price in Greater China declined 3% in January and could drop another 4-5% in February bringing it to its lowest point in 5 years.  PCB fabricators are expected to resist any demands for price decreases as they claim that their prices are already "too low".

PCB and PCBA supply chain members in China believe that that pent up buying needs of the past 3 years will break out into hard equipment purchases in 2015.

January 2015

This year is different. Rather than reflections and forecasts, it is starting with the memory of longtime colleague and friend Dieter Bergman. He did more than any other single person that I know to help the printed circuit board industry and its standards bearer, the IPC. He was consistent and persistent. He was a pioneer. He had an indomitable zest for life. There is a saying that a man is known by his enemies. Dieter was known for his accomplishments, his consistency, his selflessness, his tireless efforts to help build the industry and its standards - globally. He became an industry icon for the decades. He did this without creating a single enemy.*

*Note Rex Rozario, OBE's (Secretary General WECC, IPC and EIPC Board of Directors, and Chairman of Graphic PLC) and Peter Bigelow's (president of IMI and former member of the IPC Board of Directors) personal memories of Dieter on our comments page.

It is fitting that we all pause to reflect upon our time with Dieter and the good that he has wrought for so many around the world. It is proper that he and his memory receive the recognition that he did not seek. The IPC, for whom he toiled so long, is taking steps to ensure that will happen.

IPC APEX EXPO 2015 will recognize an IPC and industry icon, Dieter Bergman, during a tribute on Wednesday evening February 25 at the San Diego Convention Center. Dieter’s name will forever be synonymous with IPC as he leaves a legacy of accomplishments, friendships and lasting memories. During Dieter’s tribute, several IPC members will be honored with the IPC Dieter Bergman Fellow Award and will have the opportunity to bestow a Dieter Bergman Scholarship to the university or college of their choice.
The event ticket price of $25.00 will go toward the Dieter Bergman memorial scholarship fund.  "We hope you will join your colleagues in celebrating Dieter’s lifetime of achievement as this special event," says  IPC President Dr. John W. Mitchell

Times have certainly changed

Forty-Three years ago, when I was the Vice President of Business Development of Oxy Metal Finishing (Sel Rex, Udylite, Parker, et al), I was invited to speak at one of the first shows in Japan for the electronics industry. It was called INTERNEPCON JAPAN and focused on printed circuit manufacturing and electronic packaging. It was easy to plan one's time and find topics and exhibits of interest. Over the years specialized competing events developed, there as well as around the world. Then as markets and technology shifted and production began to concentrate to fewer and larger organizations, attendance began to slip. Trade organizations adapted and morphed into different profiles and areas of focus.

In Japan, INTERNEPCON became NEPCON JAPAN. To boost attendance, the show producers kept adding new concurrent events such as Electrotest, IC Packaging Expo, Automotive Component Processing Technology Expo, Wearable device Technology Expo, etc., to the point that there were 14 different areas of focus more than 2,000 exhibitors in this month's event. The attendance WAS up. But those from "our" industry were at a loss to cover the entire show, segment out what was applicable to today's and tomorrow's business while seeing items that just were of interest to them.

At the contained Printed Wiring Board Expo Oki Printed Circuits introduced its >100 layer advanced "super multilayer" rigid PCB, 7mm thick with trace widths of 0.095 mm as well as a 32Gbps high speed transmission board. Oki's Y. Shirakura stated that he would be visiting the U.S. in February seeking to form new representative relationships.

Japan's Masamitsu "Matt" Aoki has just completed updating his major charts: "Thin Type Printed Wiring Board And Their Application In Japan" version 25.0, and "Build-Up Type Printed Wiring Board And Their Application In Japan" version 15.0. Both of these detailed charts are copyrighted January, 2015. Aoki has also compiled a ranked list of the top 39 Taiwan printed circuit fabricators using data from the TPCA. Contact us if you wish a copy of the charts or the list which includes 2014 sales for each of the Taiwan companies.

Every so often I see an article or column that strikes a chord that should stir some discussion and asks a question for which there is no answer. Dan Beaulieu's January 24th "It's Only Common Sense" is one of those. Excerpts are posted on our Comments and Discussions page.

Will this put a damper on some of the electronics growth in 2015?

China’s economic growth slowed to 7.4% in 2014, downshifting to a level not seen in a quarter century and firmly marking the end of a high-growth heyday.  The slipping momentum in China, which reported economic growth of 7.7% in 2013, has reverberated around the world weakening an already soft global economy. While 7% growth would be the envy of most economies, Beijing says at least this level is needed to create enough jobs for China’s huge population.

The slowdown comes at a vulnerable time for the world economy. The Eurozone is at risk of a third recession in six years. Abenomics policies have failed to lift Japan out of stagnation. Output in many major of the emerging markets that provided  impetus for global growth over the past decade is slowing faster than expected. 

Economists see the slowdown as the prelude to an extended deceleration of growth. Leaders since mid-2014 have emphasized a “new normal” of slower growth.  How China addresses the slowdown matters. Reliance on real estate, construction and smokestack industries has reached its limits, as evidenced by rising debt and polluted skies over much of the country. source WSJ)

Sources state that CSUN Manufacturing and Ampoc Far East will both report flat or slight growth in the first half of 2015 due to continued brisk orders for wet-process PCB manufacturing equipment, as PCB manufacturers upgrade production lines and expand capacity for HDI boards and IC substrates.

Chin-Poon Industrial reported consolidated revenues of NT$5.51 billion (US$172.96 million) for the fourth quarter of 2014, hitting a quarterly record for the second consecutive quarter.  Consolidated sales for all of 2014 were up 9.8% to $673 million. Chin-Poon continues to see its plants run at full utilization buoyed by strong demand for car electronics.

Do you remember the song that began, "I was born to wonder....?"

Well, I wonder what percent of flexible circuit production in greater China (and elsewhere) is dependent upon demand for Apple's iPhone, and what percent is dependent on all of its droid, windows and other smart phone competitors.

FOXCONN has become Mexico’s second largest manufacturing exporter. General Motors is the largest.

Market observers state that Taiwan-based firms such as Apex International, Nanya Printed Circuit Board, Tripod Technology, and Unitech Printed Circuit Board, will see sales from the automotive industry drive their revenue growth in 2015.

Digitimes Research predicts that global tablet shipments will drop 11.8% in 2015. Yet, Intel achieved its goal of shipping 40 million tablet APs in 2014 and for 2015, It raised its goal by 10% to 44 million units, to account for one third of the non-Apple tablet shipments in 2015.

Oki Printed Circuits has started production of HDI PCBs having a maximum board thickness of 3.5 mm (30 layers) to support next-generation 1,000-pin LSIs with a pin pitch of 0.35 mm. These PCBs are used for socket boards used in LSI function testing devices. The tight tolerance boards are made possible by Oki's newly developed FiTT method, which is capable of forming through vias of ultrafine diameters (finished diameter 0.10 mm), a feat not possible with existing build-up or through via methods. What made this possible are high-precision laminating technologies, which minimize layer-to-layer registration offsets to within 40 µm, and high-precision drilling technologies, which use systems for adjusting via hole positions down to the micron level and optimizes drill shape and drilling process steps. Oki states that the simplicity of the process allows production at low cost and short lead times.  It will exhibit this technology Tokyo this month at NEPCON JAPAN 2015.

Reverse engineering

Fremont California's test company Datest has introduced a new PCB reverse engineering service. With its new capability, Datest states that it can now rebuild board data from printed circuit boards (PCBs) and printed circuit board assemblies (PCBAs).